SGL Carbon has defined what its management is calling “the next strategic milestones for ensuring sustainable profitable growth.”

In an ad-hoc statement released on Jul. 7, the Wiesbaden, Germany-based carbon and graphite producer announced plans to carve out its Performance Products (PP) business, which makes and markets in particular graphite electrodes, into a standalone company. For the business units Graphite Materials & Systems (GMS) and Carbon Fibers & Materials (CFM), it intends to pursue “an accelerated growth strategy.”

The carve-out of PP is planned to be completed by the end of the 2016 business year. The company said the unit will “adapt its business model to the changed market conditions especially in graphite electrodes.” This could mean a stock market flotation, a joint venture or partnership with a financial investor.

SGL added that the repositioning will allow Performance Products to “flexibly react to new strategic options, allowing it to participate in “future consolidation scenarios in the graphite electrode industry.”

For the remaining units, management is targeting organic sales growth of around 50% against the 2014 figure of €737 million, coupled with “selective bolt-on acquisitions.” For some time, the company has been pursuing expansion scenarios for lithium ion batteries, LEDs and lightweight carbon materials.

Elaborating on the plans, SGL said the decisions represent a further development of its strategy launched in 2013 with the cost savings program SGL2015 and continued in September 2014 with the announcement of the key strategic cornerstones.

The main financial target is and remains, it said, to improve the return on capital employed (on an EBITDA basis) in the group as well as in the business units to at least 15% in the medium term.

Savings of more than €240 million are targeted through SGL2015, expected to be largely completed this year. According to the company, €172 million of the goal was achieved by the end of the first quarter of 2015.

To further improve business processes, an additional group-wide program entitled “Business Process Excellence (BPX)” was launched at the beginning of this year.

SGL reported a loss of €247 million in 2014, and management has promised a substantial improvement in 2015.